An estate made a distribution to its sole beneficiary of $15,000 for the year. This distribution was not the result of a specific bequest. The estate had $40,000 of taxable interest and $34,000 of expenses attributable to earning that interest. What amount of the distribution is taxable to the beneficiary?

Question

Quizplus · Accepted Answer

The taxable income of the estate before the distribution was $40,000 minus $34,000, or $6,000. The beneficiary is only taxed on the income earned by the estate before the distribution and not on the distribution itself. Therefore, the taxable amount to the beneficiary is $6,000.

An Estate Made a Distribution to Its Sole Beneficiary of $15,000